Lunch with David Farley

David Farley is a big man – big in stature, big in voice. Size is his trademark.

When Farley fronted his first annual general meeting as chief executive of
Australian Agricultural Company
, he told shareholders they had a new bull.

“And he knows how to roar," he says.

As it has turned out, with the government shutdown of the live cattle trade to Indonesia, Farley has had plenty to roar about.

AAco is Australia’s biggest beef cattle producer. It is the second-largest landholder in the country and the second-largest live cattle exporter to Indonesia. Farley is at the centre of one of the most controversial moves in the history of Australian agriculture. And he is not particularly happy about it.

When I arrive at
Farley
’s chosen restaurant, ChaChaChar Wine Bar and Grill on Brisbane’s Eagle Street Pier, he is already at the bar, busy on his mobile and sipping what looks like a Bundy and Coke with ice. My first reaction is that Farley has gone native in his recently adopted home town of Brisbane. But no, he doesn’t drink at lunch. It is Diet Coke and ice. He has just announced AAco’s half-year results and the analysts are chasing him.

Farley explains that he has chosen the restaurant because it serves AAco’s trademark Wagyu beef – the highly marbled Master Kobe. At 12 per cent marbling it is, apparently, top of the range. The price takes my breath away – $90 a serve.

The waiter, seating us at a table overlooking the Brisbane River, is apparently unaware of Farley’s mission. He is extolling the virtues of the special of the day – grass-fed, full-grown Wagyu, from Robbins Island, off Tasmania. The derision shows on Farley’s face.

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“I have never tried grass-fed Wagyu. What marble score is it?" Only 2 to 3 per cent, the waiter concedes. Well, that settles it. Farley graciously opts for a cheaper sirloin but insists I still try his highly superior Wagyu. We can always make up for the extravagance by foregoing entrée and dessert.

Farley might roar like a bull but he is also passionate about the role of agriculture and its potential. Right now, he doesn’t believe that it is getting a fair go and that, instead of being promoted, it is being pillaged by the miners and its trade is being blown up by the animal welfare lobby and government incompetence.

One of Farley’s favourite statistics – and he trots it out several times over lunch – is that the world’s population will be more than 9 billion by 2050. The best estimates suggest that food production will need to increase by 70 per cent over today’s levels. Australia is perfectly placed to take advantage of that – as long as we don’t decimate the industry first, by digging up the land for mining and, of course, destroying the live cattle trade.

“In our business, we have two major risks – climatic risk and revenue risk," says Farley. “Climatic risk is about handling the gods and revenue risk is about handling the markets and the government. At the moment, we are having more success with the gods than the government."

It sounds like a rehearsed line as it just trips off Farley’s tongue. And now we are right into it – the live cattle trade debate.

“Australian government risk is a real risk in our business today, and I think that the intervention in the Indonesian live cattle trade showed us that. We have got a government that responded to a television program," says Farley, his tone now one of sheer exasperation.

“In effect, their whole due diligence was done off the Four Corners report. They are governing the country like it is Dancing with the Stars or Australia’s Got Talent– send in your emails, send in your texts, load up the ministers’ websites with content.

“And they responded. Now they are trying to run the herd off welfare. There is a $30 million line of credit that goes to Centrelink – and I can tell you that out at Urandangi there is no Centrelink office."

Farley sympathises with those who are keen to protect the welfare of animals.

“What we saw . . . on television, yes it was horrific, but it is not endemic [to] Indonesia. That was an isolated case. But we are paying the price of it now. We have closed the entire industry down. We are leaving an 800-tonne per day hole in the Indonesian food chain. We were feeding around 60 million Indonesians a year off our cattle. We have stopped it now. And we have got to get it going again," he says.

But hasn’t the trade been resurrected?

“No. It is [like] when George W. Bush landed on the aircraft carrier [in front of the sign] “Mission Accomplished". Well, this is far from mission accomplished. We are deluding the Australian public if we think we’re back in business. Because we’re not back in business.

“And we’re a long way from being back in business. The first shipment of Australian cattle since the ban was just last Wednesday, and it was only 3000 head. Not only is Australian industry being challenged, we are also challenging our neighbour’s food supply chain," Farley says.

“And back in Australia, what has happened is that our internal logistics chains have imploded. The helicopter pilots were stood down, the stockmen were stood down. The transport companies – the 170 road trains – are all sitting idle, the drivers were dismissed and sent back to their homes. The shipping companies now are reticent to relocate ships to Australia in case something else goes wrong. People don’t have faith that once we do go again the government will stand by us," he says.

Farley has been in agriculture ever since he left school. Born in the Riverina town of Narrandera, where his father made a living selling tractors and farm chemicals, young David started out as a jackeroo working for Rupert Murdoch’s News Ltd on cattle properties in central Queensland.

He went on, however, to become one of the stand-out identities of the cotton industry. Farley was the founding general manager, at just 25, of Colly Farm Cotton. Over 19 years he took the company’s operations, under various owners, from just 160 hectares of cotton to 30,000 hectares.

When entrepreneur John Dieter Kahlbetzer took out Colly in 2000, Farley moved on. Colly has disappeared now. Kahlbetzer sold the water licences to the government and pocketed $320 million.

“It’s the price of progress, but it is disappointing progress, I suppose," says Farley.

“The sale of the [Colly] water licences and the sale of the [cotton] gins took the best part of 350 jobs out of northern Australia and the best part of $200 million worth of exports out of Australia. What is Australia about? Nation building? Resource management? And now all of those assets are retired from production," he says.

But that is a decade behind Farley now. After leaving Colly, he briefly joined another entrepreneur, Dick Pratt, as an adviser for two years, before moving to the US and back into cotton. He returned to Australia in November 2009, to take up the reins at AAco.

In Australian agriculture today there are big issues – not just the live cattle trade to Indonesia but also the encroachment of the mining industry onto arable land. Farley is at the centre of that too.

AAco has just sold the 17,000-hectare Meteor Downs Cattle Station in central Queensland to Xstrata, the giant coalminer, for $21.6 million. How does this sit with Farley’s championing of the need to boost agriculture?

“The property you sold had mostly Wagyu stock," I suggest, as I cut into my beef with a knife that wouldn’t be out of place in a butcher shop.

“Yes. It was an interesting situation," Farley begins.

“You really have to make a decision. You can . . . fight it in the courts, fight it for maybe five years. You fight it at considerable expense. Xstrata has got bigger pockets than us. They have a bigger investment. The Queensland government takes big royalties out of them – they get nothing out of us except for employment.

“There comes a point in time when you just have to be realistic about the environment that you are working in. It is unfortunate. It is a magnificent property. Beautiful soils. Magnificent. It is going to be ripped up, literally ripped up," he says.

Farley is really worried, too, about the growth of the coal-seam gas industry.

“It is a big issue. The mining companies have the right to make good after they leave. How can they make good on [letting] fracking chemicals into water aquifers that are two and three hundred feet underground? How can they make right when they pollute these aquifers? And do they know where those aquifers are moving and flowing?

“And then you look at the accessibility, especially in Queensland, across the downs – of the rights of these mining companies to come in, establish an asset base on someone else’s farm, and extract from it.

“OK, you say to yourself, what is in it for Australia? First of all, have we got the right tax system? You only get one go – once these coalfields are gone, once these gas fields are gone, it is all gone. The tax system has to be clearly defined – and make sure it is working for Australia.

“Nauru is a classic example. Look at Nauru, now that the phosphate is gone. What will Australia be like when all these fields have been exhausted? What it should be is a powerful food-producing nation, back in the world again. Until we recognise that, we have got a real problem."

From Farley’s perspective, there is not a lot of good news out there.

“I look at my country Australia today, and look at the totally untenable position it is in. Three weeks ago, I spent four days in Canberra, meeting with the independents and with both sides of politics.

“Unfortunately, what I saw was a true mishmash of non-representative ideas. No clear direction on policy. No clear direction on the future.

“And if we are going to take Australia into the . . . future, we need to have bipartisan support on a lot of issues. We also need to recognise that we can’t run a two-speed economy. We have got a non-renewable resource that we are pumping out to the rest of the world. Yet we have got a renewable resource in agriculture that we are decimating."

On that note, it is time to bring lunch to a close. Farley has to get back to the analysts, and I feel like I need a drink.